In my May 26th post, I raised several questions that unsecured creditors in any Chapter 11 case should know the answers to and take action where appropriate. In my June 2nd post, I addressed the first question on “first-day motions”.
Let’s move on to the second question – When is the “meeting of creditors” and should I attend?
Section 341 of Title 11 of the U.S. Code, requires a creditors’ meeting – also referred to as “the 341 meeting” or “meeting of creditors,” which generally takes place within forty days after the bankruptcy is filed.
All creditors listed on a debtors schedule of debts are given notice of the meeting by the clerk of the bankruptcy court. An assistant U.S. Trustee or attorney from the U.S. Trustee’s office generally presides over the recorded meeting where a representative of the corporate debtor appears and answers questions under oath.
Creditors are not required to attend, but may want to attend as the meeting is a chance for the creditor to get a preliminary idea of:
- the debtor’s financial situation
- whether the debtor has good prospects for reorganizing
- what the debtor’s plan of reorganization might look like, and
- the likelihood of the creditor’s claim being paid.
The Assistant U.S. Trustee or attorney will questions about the debtor’s financial history, reason for filing bankruptcy, plans for reorganization and generally go through the Chapter 11 filings to insure all filings are complete, true and correct. This is a good way to educate yourself about the case and decide how actively you want or need to participate going forward.
Creditors are also permitted to ask questions at the meeting, but as a general rule, the opportunity to ask questions will be limited. If the size of your claim warrants it and you wish to do a detailed examination of the debtor about the case and/or your claim, you employ counsel to notice and take the debtor’s Rule 2004 examination – a deposition where you can inquire broadly into the debtor’s finances.
Heather L. Ries is an attorney with the Financial Restructuring and Bankruptcy Department of the law firm of Fox Rothschild LLP. Heather focuses her practice in matters related to bankruptcy, creditors’ rights, commercial workout and foreclosure disputes, and commercial litigation. You can contact Heather at 561-804-4419 or hries@foxrothschild.com.